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PostPosted: Feb 12, 2017 2:15 pm 
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I am slightly off topic here, but do wonder.

The EPR also suffers from being behind schedule / over budget in it's attempts to build new plants. Both the AP1000 and EPRs were supoosed to be big plants that could take advantage of the economy of scale. Was the large size part of the problem? Too much too soon?


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PostPosted: Feb 12, 2017 3:36 pm 
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I wasn't aware AP1000 had any catastrophic schedule problems? Certainly not on the scale of the EPR.

The EPR suffers from being a 1970s PWR that had more equipment piled on it in a desperate attempt to meet Gen III+ Safety requirements.
The AP1000 is more intelligent in that regard, but the AP1000 is actually a fairly small unit by modern standards.


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PostPosted: Feb 12, 2017 4:56 pm 
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Eino wrote:
I am slightly off topic here, but do wonder.

The EPR also suffers from being behind schedule / over budget in it's attempts to build new plants. Both the AP1000 and EPRs were supoosed to be big plants that could take advantage of the economy of scale. Was the large size part of the problem? Too much too soon?


And Korea's APR1400 is 1400MW, and on time and budget.


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PostPosted: Feb 13, 2017 9:26 am 
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Toshiba’s Nuclear Reactor Mess Winds Back to a Louisiana Swamp

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If you want to understand why Toshiba Corp. is about to report a multi-billion dollar write-down on its nuclear reactor business, the story begins and ends with a one-time pipe manufacturer with roots in the swamp country of Louisiana. The Shaw Group Inc., based in Baton Rouge, looms large in the complex tale of blown deadlines and budgets at four nuclear reactor projects in Georgia and South Carolina overseen by Westinghouse Electric Co., a Toshiba subsidiary.

On Tuesday, Toshiba is expected to announce a massive write-down, perhaps as big as $6.1 billion, to cover cost overruns at Westinghouse, which now owns most of Shaw’s assets. The loss may actually eclipse the $5.4 billion that Toshiba paid for Westinghouse in 2006 and has forced the Japanese industrial conglomerate to put up for sale a significant stake in its prized flash-memory business. Toshiba had to sell off other assets last year following a 2015 accounting scandal.

Toshiba made a big bet on a nuclear renaissance that never materialized, in part because it couldn’t build reactors within the timelines and budgets it had promised. The company had anticipated that Westinghouse’s next-generation AP1000 modular reactor design would be easier and faster to execute -- just the opposite of what happened. Now the Japanese company may exit the nuclear reactor construction business altogether and focus exclusively on design and maintenance.

“There’s billions and billions of dollars at stake here,” says Gregory Jaczko, former head of the U.S. Nuclear Regulatory Commission (NRC). “This could take down Toshiba and it certainly means the end of new nuclear construction in the U.S.” Toshiba confirmed it will unveil a “huge loss” on Tuesday; a spokeswoman declined further comment. In January, Satoshi Tsunakawa, Toshiba’s president, said the company may sell shareholdings, real estate or other assets if needed to strengthen its balance sheet. “We will keep considering all options as needed and promptly, and take all necessary steps,” he said at a briefing in Tokyo.

When Toshiba bought Westinghouse a decade ago, the U.S. Congress had just started dangling loan guarantees and other incentives aimed at restarting a dormant nuclear industry. In 2008, Westinghouse signed deals to build four new reactors for utilities Southern Co. and Scana Corp., the first U.S. nuclear plants since the 1979 accident at Three Mile Island to be approved for construction by regulators. In a 2015 interview with Bloomberg Businessweek, Southern Chief Executive Officer Thomas Fanning said his utility’s two reactor projects at Plant Vogtle in Georgia were “going to be one of the most successful mega-projects in modern American industrial history.”

To build that mega-project, Westinghouse turned to Shaw, a newcomer to nuclear work. Shaw was founded in 1987 by James Bernhard Jr., who distinguished himself through his deal-making acumen. He got his start paying $50,000 for the assets of a bankrupt pipe fabricator, and grew via one acquisition after another. In 2000, Bernhard swooped in at a bankruptcy auction and, during an 18-hour bidding war, bought Stone & Webster Inc., a once-venerable engineering firm that had already agreed to a deal with a much bigger rival.

Stone & Webster had built the Massachusetts Institute of Technology’s campus and many of the country’s nuclear plants from the 1950s to the 1970s, but it was a shell of its old self when Bernhard bought it. Still, the name gave Shaw new credibility in the nuclear field, which it capitalized on to win all of Westinghouse’s contracts. “They weren’t necessarily qualified, but they had the heart and the go-get-them to take it on,’’ says Jeffrey Kellerman, a retired construction project controller who worked for Shaw at its nuclear sites. Bernhard declined to comment for this story.

Building nuclear reactors is a tall order, given the regulatory complexity and consortium of contractors required to get the job done. And in fairness to Westinghouse and Shaw, plenty of other companies have missed deadlines. “Nuclear construction on-time and on-budget? It’s essentially never happened,’’ said Andrew J. Wittmann, an analyst who covers the industry for Robert W. Baird & Co.

It’s easy to see why Shaw wanted Toshiba’s business, but harder to understand why Toshiba chose Shaw. More established contractors simply may not have wanted the work, but Bernhard also used his deal-making skills to sweeten the agreement by taking on a chunk of Toshiba’s debts temporarily. “If you want to have a business, you have to get plants up and running, so they went forward even if it wasn’t a perfect match-- that was the calculation for Toshiba,” says David Silver, an analyst at Morningstar in Chicago.

Westinghouse executives hoped its AP1000 reactors’ main components, or modules, could be built efficiently at specialized work yards, then shipped to a plant site and snapped together like enormous steel-and-concrete Legos. On top of that, the U.S. government in 2005 gave nuclear developers a package of tax credits, cost-overrun backstops, and federal loan guarantees. In the next few years, U.S. utilities filed dozens of applications to build new reactors.

After Westinghouse hired Shaw to handle construction in 2008, it wasn’t long before the company’s work came under scrutiny. By early 2012, NRC inspectors found steel in the foundation of one reactor had been installed improperly. A 300-ton reactor vessel nearly fell off a rail car. The wrong welds were used on nuclear modules and had to be redone. Shaw “clearly lacked experience in the nuclear power industry and was not prepared for the rigor and attention to detail required,’’ Bill Jacobs, who had been selected as the state’s monitor for the project, told the Georgia Public Service Commission in late 2012.

The troubles were only starting. At Southern’s two new reactors in Georgia -- a massive construction site on the edge of the Savannah River-- thousands of workers have logged more than 25 million man-hours, yet the project is years behind schedule.

Originally planned to open in 2016 and 2017, they’re now slated for 2019 and 2020--and that may be a stretch. To hit the new targets, Westinghouse would have to accelerate the pace of work to “over three times the amount that has ever been achieved to date,” Jacobs, the state’s project monitor, told the utility commission last year. In November, Westinghouse said 33.4 percent of the construction was complete, but a utility supervisor with Southern who asked not to be identified said he’s skeptical. The hardest part of the project – the reactor’s center – has just started, he said.

Just as problems began to surface, in July 2012 Shaw agreed to sell itself for $3.3 billion to Chicago Bridge & Iron Co., a much larger engineering firm that wanted in on the envisioned nuclear renaissance. But three years later, with little progress to show for itself, CB&I decided to cut its losses. It sold the bulk of Shaw’s assets to Toshiba for $229 million, accepting the significantly lowered price in exchange for shedding liabilities related to the projects.

But in April 2016, four months after the deal closed, Toshiba concluded it had miscalculated and accused CB&I of inflating Shaw’s assets by $2.2 billion, and asked to renegotiate. CB&I balked and sued Toshiba for breach of contract last July. A preliminary decision in December ruled in favor of Toshiba’s request to renegotiate. CB&I has appealed that ruling. “We remain confident this issue will come to a resolution favorable to CB&I,” said Gentry Brann, a spokeswoman for the company. CB&I has argued that at least some of the reactor problems have been because of Westinghouse and its AP1000 designs.

Westinghouse has turned to another construction contractor, Fluor Corp., to help get its projects back on track, but it’s too early to say how much progress they’re making. Meanwhile, the NRC continues to press Westinghouse about problems with its AP1000 design after a neutron shield block, which contains radiation, failed during testing. Regulators will hold a hearing this week at which Westinghouse is expected to explain its work on the issue; Toshiba meanwhile declined to comment.

Those troubled projects in the American South are now threatening the Japanese icon’s foundations. The value of Toshiba shares has been cut in half over the last six weeks, wiping out more than $7 billion in market value. And what of the U.S. nuclear renaissance? Westinghouse’s projects for Southern in Georgia and Scana in South Carolina had once been viewed as part of a rebirth of the U.S. atomic power industry. However, stumbles with those projects, the nuclear disaster in Fukushima and a flood of cheap natural gas that lowered U.S. power prices made new reactors increasingly expensive and risky. Of the 30-odd applications for new reactors that started in the mid-2000s, only the four Westinghouse units have gone forward.

One figure who seems to have come out of the Westinghouse mess pretty much unscathed is Shaw founder Bernhard. He completed the sale of his firm to CB&I in 2013, pulling in $3.3 billion for himself and other shareholders. Bernhard, whose stake was worth about $50 million at the time of the sale, now runs a private equity firm in Baton Rouge. On his website, Bernhard touts his 25-year experience at Shaw and says his new fund “seeks to create sustainable value.” "They got out whole and then some,” said Silver, the analyst with Morningstar. “It was a good deal for them but only because they were able to unload the hot potato.”


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PostPosted: Feb 13, 2017 9:29 am 
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Toshiba faces challenges as it prepares for nuclear writedown

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Toshiba is facing a difficult conundrum as the Japanese industrial conglomerate prepares to unveil the scale of its multibillion-dollar writedown to its struggling US nuclear business this week. On Tuesday it will put a figure on the precise goodwill write-offs related to Westinghouse’s $229m purchase last year of US construction contractor Stone & Webster from Chicago Bridge & Iron. Investors have been waiting since Christmas for the promised clarity, which will far exceed the $87m goodwill charge originally forecast.

The write-offs are down to still-unresolved delays and legal wranglings over two projects in the US. Toshiba’s lenders will need the company to pin down the exact size of the write-off, which analysts warn could be as large as $7bn, to judge whether they can continue offering their loans. But analysts warn that without an end in sight, nuclear experts say it will be virtually impossible for Toshiba to come up with an accurate estimate of future costs to which the company is exposed. That would leave the already cash-strapped group mired in even deeper financial trouble.

Toshiba said it would disclose the writedown on Tuesday based on the best-available cost estimate for its US nuclear business, but acknowledged the cost projection could be adjusted in the future. Already the company has refused to rule out the risk that the impairment charge would wipe out its shareholder equity, which stood at ¥363bn ($3.2bn) at the end of September. Since the announcement in late December Toshiba’s share price has halved. Mycle Schneider, a nuclear expert based in Paris, said cost overruns were an industry-wide challenge that was not only the result of a tightening of global safety regulations since the meltdown at the Fukushima Daiichi nuclear power plant in north-eastern Japan in March 2011.

“In a country like the US, it has been decades since they built nuclear reactors so there are no operational, skilled teams and competent, experienced managers any more,” Mr Schneider said. In Toshiba’s case, he added, the company may have also lacked the ability to judge the industrial and regulatory environment in a foreign county. The company is already seeking a buyer for a minority stake in its profitable memory chip business to avoid falling into negative equity by the time its financial year ends on March 31. The large writedown will be the second relating to Toshiba’s stake in the US nuclear business, after it booked a goodwill impairment charge of $2.3bn last year. Even if Toshiba addresses the goodwill on the latest S & W acquisition, it still faces rising material and labour costs to complete the two US nuclear plants, in Georgia and South Carolina. The construction of Westinghouse’s AP1000 reactors in China has also faced repeated delays. Toshiba has said it plans to complete construction work at the two US nuclear facilities under question, but said it would otherwise scale back its overseas nuclear business. But the company has failed to find another investor in Westinghouse for many years and will probably face government pressure from both Japan and the US if it were to abandon its US subsidiary.

“It is very unlikely Toshiba will walk away from the US nuclear projects. If they don’t terminate, the only thing they can do is to do their utmost to meet their cost and schedule targets,” said Damian Thong, an analyst at Macquarie. The company has recently held meetings with the Development Bank of Japan that could ultimately lead to an injection of state-backed capital. But government officials caution against putting Japan’s nuclear players under state control. “The Toshiba crisis is so large that you can imagine the need for a government bailout. There will be some kind of a national scheme but that could have a serious impact on state finances,” Mr Schneider said.


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PostPosted: Feb 13, 2017 9:33 am 
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Toshiba prepares to unveil nuclear hole, other perils threaten

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Toshiba will on Tuesday detail a write-down of close to $6 billion after bruising cost overruns at its U.S. nuclear arm, turning investor attention to the Japanese group's efforts to fix that and other balance sheet headaches. The TVs-to-construction conglomerate warned of a potential multi-billion dollar nuclear write-down in December, a year after a $1.3 billion accounting scandal. Sources familiar with the matter say the final charge, to be detailed alongside quarterly earnings, will be as high as 700 billion yen ($6.2 billion), a sum which alone would wipe out the company's shareholder equity. Toshiba, which has seen its market value almost halve since the prospect of a write-down emerged in December, is also expected to outline the prospects for its nuclear arm and update investors on efforts to raise capital, including through the sale of a stake in its flagship memory chips business. "The question for Toshiba is how is it going to move forward," said Masahiko Ishino, analyst at Tokai Tokyo Research Center. He added Toshiba would need to show how it could stay competitive in the cash-generating but capital-intensive memory chip industry, given its battered balance sheet. Toshiba has offered a 19.9 percent of its prize chips business to investment funds and rivals including Bain Capital, SK Hynix and Micron Technology.

On Thursday, a source said that Toshiba had received bids of between 200 billion yen to 400 billion yen for the flash memory stake, a range that could cover the 300 billion yen the company wants to raise. It prefers multiple investors. Toshiba is a pillar of Japan's business establishment. Born in the tumult of Japan's emergence from centuries of isolation, it made Japan's first light bulb and was a pioneer in laptop computers. Toshiba's 190,000 workers, employed at some 500 units, likely will make it too big to fail. But as with other established Japanese firms that have dodged financial collapse, such as liquid crystal display inventor Sharp, Toshiba could face protracted pain. Financial sources last week pointed to problem businesses within Toshiba beyond nuclear, including Landis+Gyr. Toshiba agreed to buy that unlisted meter maker for $2.3 billion in 2011 to tap smart grid demand that at the time was expected to grow six-fold to around $70 billion in 10 years. At the end of September, the goodwill value of Landis+Gyr was 143.2 billion yen ($1.3 billion). Other stumbling blocks for Toshiba include a $7.4 billion commitment four years ago to buy U.S. liquefied natural gas believing that would help sell power plant turbines.

A fall in Asian gas prices, now at about half the level they were, has cast doubt on that strategy. Toshiba, on a stock exchange watchlist barring it from issuing new shares, must also contend with fallout from the 2015 accounting scandal. Mitsubishi UFJ Trust and Banking last month said it will seek 1 billion yen in damages, while sources say Sumitomo Mitsui Trust Bank and Mizuho Trust & Banking are preparing similar suits. With its latest financial crisis unresolved, investors appear most nervous about Toshiba's short-term prospects. The cost of insuring against a credit default has soared over the past two months. Five-year insurance, or credit default swaps, was quoted at 315/355 basis points on Friday, compared with 75 basis points in mid-December. That quote, below late December highs, suggests it would cost $315,000-$355,000 per year for five years to insure $10 million in bonds. The CDS curve is inverted, suggesting short-term cover is most expensive.


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PostPosted: Feb 14, 2017 8:04 am 
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Toshiba’s pending losses loom over Vogtle, VC Summer construction

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Plant Vogtle and VC Summer owners are preparing for a potential shakeup in construction contracts ahead of expected heavy losses in the nuclear construction business by the struggling Toshiba Corp. Each nuclear power plant has two reactor units under construction, all Westinghouse AP1000 designs. Westinghouse is an American subsidiary of Japan-based Toshiba, which is expected to release its third-quarter earnings today. Those earnings, or losses, could affect the contracts at Vogtle, near Waynesboro, and VC Summer, near Jenkinsville, S.C. Because of its expansion into the American nuclear power arena and its acquisition of Stone and Webster from engineering firm Chicago Bridge & Iron, Toshiba is expected to announce a hefty write-off, potentially in the billions of dollars. The company began warning stakeholders of the news in December. “Westinghouse has found that the cost to complete the U.S. projects will far surpass the original estimates, mainly due to increases in key project parameters, resulting in far lower asset value than originally determined,” the company said in a release.

Georgia Power, which owns the largest percentage of Plant Vogtle, said it is committed to finishing the new reactors on time. “We continue to monitor the financial position of Toshiba, which is the guarantor for Westinghouse under our engineering, procurement and construction (EPC) agreement. Under this agreement, Westinghouse has taken the actions required in connection with Toshiba’s financial condition,” a Georgia Power spokesman said. Vogtle’s two new units are already over budget and past their original 2016-17 deadlines. They are set to begin operations in 2019 and 2020, respectively, and Georgia Power has remained steadfast in claims that those deadlines will be met. “The EPC agreement continues to protect Georgia Power customers through its firm and fixed nature, and we expect the contractor to employ all possible means to meet the current schedule targets for Vogtle Units 3 and 4,” a company spokesman said. Not everyone is convinced, including the Southern Alliance for Clean Energy, which in a blog post Monday claimed the “nuclear revival” is ending before it ever really started. Toshiba bought Westinghouse in 2006 when prospects for a revival of the American nuclear power industry were good. In 2012, the Nuclear Regulatory Commission signed construction and operating licenses for Vogtle’s expansion Units 3 and 4. It was the first such license issued since 1979, but concerns were already mounting. The earthquake and subsequent tsunami that devastated Japan in 2011 created one of the most prolific nuclear disasters in history. Then, as the oil and gas industry became the cheaper alternative for electricity production, prospects for the “nuclear revival” grew dimmer. The contract for construction was a fixed-price agreement, which were common among nuclear power plant projects in the 1960s.

The Southern Alliance’s blog post Monday stated, “Similar fixed price contracts had been offered up at the beginning of the nuclear era in the 1960s, and that didn’t end well. … Navigant Consulting found that 13 early plants built by General Electric and Westinghouse had forced the two nuclear developers to subsidize more than a $1 billion in construction costs. … Accounting for inflation that billion would be equal to almost $8 billion today.” Toshiba’s push into American nuclear construction and the related financial troubles today stem from the purchase of Chicago Bridge and Iron Stone Webster. The two entities have been at odds, even in a courtroom, about the value of the sale and subsequent Toshiba losses. Toshiba said CB&I misrepresented the value of the company. “Westinghouse has found that the cost to complete the U.S. projects will far surpass the original estimates, mainly due to increases in key project parameters resulting in far lower asset value than originally determined,” the company said in a previous release. Construction at Vogtle or VC Summer isn’t grinding to a halt amid these financial issues. A Georgia Power spokesman said, “While we cannot speculate on what may happen in the future with Toshiba or Westinghouse and their overall business, we will always hold them, as the contractor, accountable for their responsibilities under our agreement.”

Santee Cooper, one of the large utility company owners of VC Summer, has planned a public meeting about the Toshiba earnings release this afternoon. Georgia Power or other ownership stakeholders don’t currently have public meetings planned. Westinghouse representatives said the company will not make a statement about the report until after it is released.


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PostPosted: Feb 14, 2017 8:16 am 
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Delays, confusion as Toshiba reports $6 billion nuclear hit and slides to loss

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After a day of delays and confusion, Japan's Toshiba Corp (6502.T) said on Tuesday it expected to book a $6.3 billion hit to its U.S. nuclear unit, a writedown that wipes out its shareholder equity and will drag the group to a full-year loss. Hours earlier on Tuesday, the battered conglomerate rattled investors by failing to release its earnings on schedule, saying initially it was 'not ready' and then announcing later it needed more time to probe its Westinghouse nuclear business after internal reports uncovered potential problems. The figures eventually released were numbers that have yet to be approved by its auditor and Toshiba cautioned investors that a major revision was possible. Fully audited numbers are now not due till March 14 after the firm was granted a reprieve for its formal filing by Japanese regulators. Toshiba also said in a statement it could push harder to raise capital, including selling a majority stake in its memory chip arm. Previously, it had sought to sell just under 20 percent of its prize business. "Finally now people are starting to recognize that internal control problems, the accounting issues and governance issues are very real and no longer abstract," said Zuhair Khan, an analyst at Jefferies in Tokyo. "They impact the viability of the company."

Shares in the group slid 8 percent, putting the company's market value at 973 billion yen ($8.6 billion), less than half its value in mid-December. Just under a decade ago, the firm was worth almost 5 trillion yen. It also announced the first top-level departure since the nuclear problems were uncovered in December: chairman Shigenori Shiga, a former Westinghouse boss brought in to the top role last year after a $1.3 billion accounting scandal in 2015 shook up Toshiba's upper ranks. Toshiba said it expected to book a 499.9 billion yen ($4.4 billion) net loss for the nine months to December, and a 390 billion yen net loss for the full year. It also ended 2016 with negative shareholder equity due to the 712.5 billion yen nuclear writedown - a charge that was first flagged in December last year. Toshiba said it would withdraw from nuclear plant construction overseas. Reuters reported this month that Toshiba was seeking at least a partial exit from ventures in Britain and India, a blow to both countries' nuclear plans.

In an earlier, separate statement, Toshiba outlined concerns at its Westinghouse business, the U.S. nuclear unit bought from the UK government a decade ago. Internal reports, Toshiba said, suggested controls at Westinghouse had been "insufficient" and it needed to look into whether senior managers at Westinghouse exerted "inappropriate pressure" during discussions over a U.S. deal to buy the company at the heart of its cost overruns, it said. "We judged that it would take about a month for external lawyers ... to conduct these further probes and for the independent auditors to review the results," Toshiba said. A source briefed on the matter said Toshiba had not been able to immediately secure the approval of its auditor, PricewaterhouseCoopers Aarata. The source asked not to be identified because he is not allowed to talk the media. PricewaterhouseCoopers Aarata declined to comment, citing client confidentiality. Toshiba declined to comment on the audit process.


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PostPosted: Feb 14, 2017 5:11 pm 
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Toshiba to confirm cessation of new nuclear projects outside Japan

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Toshiba is expected to confirm that it is withdrawing from new nuclear projects outside Japan, dealing a blow to plans for a new power station in the UK. The Japanese company has been reviewing its investment in overseas nuclear projects and is expected to make an announcement on Tuesday. Toshiba owns Westinghouse, the US-based nuclear developer whose AP1000 reactors are to be used at a planned £10bn power plant at Moorside in Cumbria. Toshiba also has a 60% stake in NuGen, the company that would build the Moorside plant near Sellafield, so pulling out would leave the government having to look for new backers.


Toshiba’s Chairman Resigns as Its Nuclear Power Losses Mount

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The company also said on Tuesday that its chairman, Shigenori Shiga, would resign, ending weeks of speculation. Its executives have come under intense scrutiny because of the financial mess and the years of flawed business decisions that led to it. The company said it was examining whether managers had acted inappropriately when they struck a deal to buy a company at the center of the problems. The trouble stems from Toshiba’s management of Westinghouse Electric Company, the American nuclear power business it acquired a decade ago. Westinghouse faces spiraling cost overruns at nuclear plant projects in the United States, and Toshiba said on Tuesday that it would like to sell all, or part, of its controlling stake in the company. Previous efforts to offload a portion of its shares in the subsidiary have failed, however.


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PostPosted: Feb 14, 2017 9:13 pm 
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Why its Big Bet on Westinghouse Nuclear is Bankrupting Toshiba

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Toshiba, the venerable 80 year old Japanese electronics giant, appears to be going bankrupt. Toshiba was supposed to have announced at least $7 billion in losses during an earnings call yesterday. Instead, it cancelled the report, saying "it was not able to immediately secure the approval of its auditor." Financial Times reports that "The delay to publication of Toshiba’s earnings came as the company said lawyers were examining claims by a whistleblower in the US that Westinghouse mishandled its takeover of Stone & Webster." Toshiba's losses stem from its construction of new nuclear plants in the United States. The collapse of Toshiba will result in the halting of all new nuclear power plant construction by its US-based subsidiary, Westinghouse.


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PostPosted: Feb 15, 2017 2:30 pm 
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Downfall of Toshiba, a nuclear industry titan

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After a day of chaotic communication, a stock sell-off and a $6.3bn writedown that may destroy one of Japan’s greatest industrial names, the Toshiba president’s bow of apology finally came. Satoshi Tsunakawa’s head nodded for just one perfunctory second on Tuesday. Most assume there will be much deeper, longer bows to come as Toshiba leads investors, customers, employees and Japan as a whole through the country’s first downfall of a nuclear industry titan. In a humiliating setback for a conglomerate that had only recently touted its nuclear business as a core growth driver, Toshiba said it would pull out of constructing new plants overseas and focus on providing less lucrative but lower-risk reactor designs and nuclear equipment.  One investor says the potential downsizing of Toshiba’s nuclear ambitions could make what remains of the company difficult “even for a contrarian investor to consider”.  It is also a damaging blow to the outlook for the nuclear industry worldwide. Toshiba’s decision to give up on bidding to be a lead contractor on nuclear power plant projects will dramatically reduce its ability to compete with rivals from China, South Korea and Russia, and limit the options for countries seeking to build reactors. 

As Toshiba was reporting its huge writedown, the French utility EDF, which has also been beset by problems with its new-build nuclear projects, warned of a “challenging” 2017 after being hit by weak power prices and problems with some existing reactors last year. Unlike Toshiba, EDF says it is determined to push ahead with its international nuclear new-build strategy, seeing it as a way to leverage France’s historic expertise in reactor technology and diversify away from an increasingly competitive domestic market. But since 2007, the French nuclear industry has only won one new deal: the controversial £18bn Hinkley Point project in the UK. "From now on, there are only three major players in the global nuclear power plant market: Korea, China and Russia,” says Michael Shellenberger of Environmental Progress, a pro-nuclear campaign group. “The US, the EU and Japan are just out of the game. France could get back in, but they are not competitive today.” 

Toshiba bought the US-based Westinghouse nuclear business from the British government’s BNFL for $5.4bn in 2006, in the hope of profiting from an upturn in reactor construction that was optimistically dubbed the “nuclear renaissance”. Instead, the Westinghouse deal has brought Toshiba to its knees. Having lost crucial skills for leading large nuclear projects while construction was largely on hold in both the US and Europe after the 1986 Chernobyl disaster, both Westinghouse and EDF were unprepared when demand returned in the 2000s, according to Colette Lewiner, an energy adviser at Capgemini.  Coupled with increasingly onerous safety requirements from regulators following the 9/11 terrorist attacks in 2001 and the Fukushima accident in 2011, and ambitious commitments to innovative reactor designs, the skills shortages meant that the costs of new-build projects spiralled out of control.

Toshiba, hit by massive cost overruns and delays linked to Westinghouse’s nuclear projects in the US, is now poised to warn investors that the group as a whole faces uncertainty over continuing as a going concern, say analysts.  Asked about the roots of Toshiba’s woes, Mr Tsunaka said what analysts have long concluded: “Looking back now, we can’t deny it was the Westinghouse acquisition.” The misery for Toshiba is that its failed bet on Westinghouse may now leave the group fundamentally little more than a nuclear business as it is forced to sell off whatever other businesses it can. Mr Tsunakawa suggested that Toshiba’s options include selling its controlling stake in Westinghouse, but few analysts see an obvious buyer either in or outside the US. 

“They cannot get rid of the nuclear business,” says Kota Ezawa, analyst at Citigroup.

Toshiba is therefore on course for upheaval that will fundamentally change the shape of a group that has spent more than a century at the heart of Japan’s industrialisation. Businesses that have defined Toshiba — most prominently the NAND memory chip business — could now be wholly or partially sold off. None of Toshiba’s options is attractive. Preliminary figures released on Tuesday show Toshiba is already deeply in negative shareholder equity, and the consequences of that remaining the case by the end of March, and continuing weak internal controls, raise the prospect of the company being delisted from the Tokyo Stock Exchange.  “The risk of delisting is still very real,” says Hisashi Moriyama, analyst at JPMorgan.  Punctuating Mr Tsunakawa’s explanation of what had gone wrong at Toshiba were signals that its restructuring decisions are now being led by the company’s biggest bank lenders, Mizuho and Sumitomo Mitsui Financial Group. 

If its asset sales are unsuccessful, most analysts assume that some form of government intervention is likely, especially since Toshiba plays a specific role in the decommissioning of the stricken Fukushima nuclear plant.  “Some form of government support will be needed in the future,” says Mr Moriyama. “It may be necessary for Toshiba to partner with Hitachi and Mitsubishi Heavy Industries to survive global competition.”  EDF, meanwhile, is contending with a government-directed restructuring of the French nuclear industry.  The company is being pushed by the French state, its controlling shareholder, to rescue former rival Areva by taking over its struggling reactor business that is behind EPR technology. The EPR reactor that EDF is building at Flamanville in France is six years late and €7.2bn over budget. 

The Areva deal — along with the Hinkley Point project and an estimated €55bn bill in the coming decade to extend the lifespan of France’s 58 existing reactors — will add to EDF’s debt load and increase its exposure to nuclear power at a time when the market, at least in developed countries, is shrinking.  Worldwide, just three reactors started construction last year, and 51 were begun between 2010 and 2016, according to the International Atomic Energy Agency, compared to numbers in the 20s and 30s per year that were common in the 1960s and 1970s. Mr Shellenberger argues that with so few plants being built, and both Westinghouse and EDF choosing to promote new reactor designs to answer public concerns about safety, it has been hard for companies to achieve cost reductions through repeated construction of similar models. Ms Lewiner says a new wave of nuclear construction in France, possible early in the next decade, could help EDF gain the experience it needs to become more internationally competitive.  But with the prices of renewable energy from wind and solar falling fast, and cheap gas unlocked by the shale revolution, it may be increasingly hard for nuclear to compete. The IAEA still expects global nuclear capacity to grow, until at least 2030, although it thinks the increase could be just 1.9 per cent over the whole period. Faster growth will depend principally on the pace of demand in China, South Korea, India and eastern Europe: markets where neither Toshiba nor EDF have a particularly competitive advantage. Hopes of a nuclear renaissance have largely disappeared. For many suppliers, not least Toshiba, simply avoiding a nuclear dark ages would be achievement enough.


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PostPosted: Feb 17, 2017 8:01 pm 
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Meltdown of Toshiba’s Nuclear Business Dooms New Construction in the U.S.

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On Tuesday, Toshiba projected a $6.3 billion write-down for its nuclear unit and said it was looking to unload its stake. “It looked like a big deal at the time, but it’s turned into a mess,” says Michael Golay, a professor of nuclear science and engineering at MIT. “And it’s likely to have a very chilling effect.”


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PostPosted: Feb 18, 2017 7:48 pm 
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How Toshiba Lost $6 Billion

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PostPosted: Feb 19, 2017 1:07 pm 
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To stay afloat, Toshiba says it may have to sell a majority stake in its last remaining crown jewel: its flash-memory business. "Toshiba is being torn apart," says Amir Anvarzadeh, head of Japanese equity sales at BGC Partners in Singapore. "It’s going to survive, it’s not going to go bankrupt. But it’s the end of Toshiba as a company with any hopes to grow."


Is it now the right time to invest in the company? There is an old saying, that the consensus opinion of investors is always wrong. A lot of new technologies are being developed that promise to replace flash memory. On the other hand, the development of CO2 turbines look quite promising.


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PostPosted: Feb 20, 2017 4:08 pm 
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Toshiba pulling plug on US nuclear reactor plan

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The Japanese manufacturer had been contracted to build the third and fourth reactors for U.S. utility NRG Energy's South Texas Project, taking Toshiba's advanced boiling water reactors abroad for the first time. Toshiba looks to pull out of the project, and will decide later what to do with its stake in the joint venture that serves as the developer.

The reactors were to debut as early as 2016. But delays on the project have brought heavy costs for Toshiba, including write-downs totaling 72 billion yen ($638 million at current rates) logged in fiscal 2013 and fiscal 2014. Ground has not been broken on the units, while work such as civil engineering lies outside Toshiba's purview. Further losses are unlikely, according to a source involved with the project.


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